EX-99.1 2 d49235exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
           
           
 
NEWS RELEASE
    Contact:  
 
 
    Transcontinental Realty Investors, Inc.  
 
FOR IMMEDIATE RELEASE
    Investors Relations  
 
 
    (800) 400-6407  
 
 
    investor.relations@primeasset.com  
           
CORRECTING and REPLACING Transcontinental Realty Investors, Inc. Reports Second Quarter 2007 Results
DALLAS—(BUSINESS WIRE)—2007: Please replace the release dated Aug. 14, 2007 with the following corrected version due to multiple revisions.
The corrected release reads:
TRANSCONTINENTAL REALTY INVESTORS, INC. REPORTS SECOND QUARTER 2007 RESULTS
DALLAS (August 15, 2007) — Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, today reported a net loss applicable to common shares of ($13.1) million, or ($1.66) per diluted share for the three months ended June 30, 2007, compared to net income of $4.6 million, or $0.56 per share for the same period in 2006.
For the six months ended June 30, 2007, the Company reported a net loss of ($19.6) million or ($2.49) per share, as compared to a net loss of ($3.9) million or ($0.50) per share for the same period in 2006.
For the three and six month periods ended June 30, 2007, as compared to the same periods in 2006, higher operating income from acquisitions and completed developments was generally offset by a) increased interest expense due to acquisitions and refinancing and b) lower gains from fewer land and income-producing property sales.
For the three months ended June 30, 2007:
TCI incurred a net loss of ($13.1) million for the three months ended June 30, 2007, including a loss from discontinued operations of ($496,000), as compared to a net income of $4.6 million for the three months ended June 30, 2006, including income from discontinued operations of $1.7 million and a gain on sale of land of $8.7 million. Fluctuations in this and other components of revenues and expense between the three month period ended June 30, 2007 and 2006 are discussed below.
Rents increased to $40.3 million in 2007 as compared to $29.4 million in 2006. The increase is principally due to additional rental income from the completion of new apartment construction projects and acquisitions of commercial properties including the January 2007 acquisition of the Parkwest I and II office buildings in Dallas, Texas.
Property operating expenses increased to $22.8 million in 2007 as compared to $17.8 million in 2006 due to the completion of new apartment construction projects and acquisition of commercial properties.
Depreciation and amortization increased to $6.8 million in 2007 as compared to $4.9 million in 2006 due to the completion of new construction projects and acquisitions of commercial properties.
Mortgage and loan interest expense increased to $19.6 million in 2007 as compared to $12.4 million in 2006. The increase is due to an increase in mortgages payable related to acquisitions and refinancing of income-producing properties as well as land held for development.
TCI recognized no gains on land sales in the three month period ended June 30, 2007. In 2006, the Company sold 168 acres of land in two separate transactions, generating net cash proceeds of $16.0 million and recognized gains of $8.7 million.
Income from discontinued operations before income taxes decreased to a net loss of ($763,000) in 2007 from net income of $2.7 million in 2006 due principally to no income-producing properties being sold in 2007. In 2006, TCI sold two apartment projects for a total sales price of $9.2 million, generating net cash proceeds of $3.4 million and recognized gains of $3.3 million.
For the six months ended June 30, 2007;
TCI had a net loss of ($19.6) million for the six months ended June 30, 2007, including income from discontinued operations of $1.2 million and gains on land sales of $1.1 million, as compared to a net loss of ($3.9) million for the six months ended June 30, 2006, including income from discontinued operations of $1.3 million and gains on land sales of $9.0 million. Fluctuations in this and other components of revenues and expense between the six-month period ended June 30, 2007 and 2006 are discussed below.

 

 

Rents increased to $76.4 million in 2007 as compared to $58.2 in 2006. The increase is due to additional rental income from the completion of new apartment construction projects and the acquisition of commercial properties including the January 2007 acquisition of the Parkwest I and II office buildings in Dallas, Texas.
Property operating expenses increased to $44.3 million in 2007 as compared to $35.3 million in 2006 due to the completion of new apartment construction projects and acquisition of commercial properties.
Depreciation and amortization increased to $12.2 million in 2007 as compared to $9.8 million in 2006 due to the completion of new construction projects and acquisitions of commercial properties.
General and administrative expenses increased to $5.2 million in 2007 as compared to $3.0 million in 2006 due principally to a one-time receipt of litigation settlement proceeds in 2006.
Mortgage and loan interest expense increased to $35.4 million in 2007 as compared to $24.6 million in 2006 due to an increase in mortgages payable related to acquisitions and refinancing of income-producing properties as well as land held for development.
Gain on land sales decreased to $1.1 million in 2007 from $9.0 million in 2006. In 2007, TCI sold 97 acres of land in two separate transactions for sales prices totaling $4.5 million, generating $800,000 in net cash proceeds and recognized gains of $1.1 million. In 2006, the Company sold 179 acres of land in three separate transactions for sales prices totaling $30.1 million, generating $17.3 million in net cash proceeds and $9.0 million in recognized gains.
Income from discontinued operations before income taxes decreased to net income of $1.9 million in 2007 from net income of $2.0 million in 2006. In 2007, the Company sold one apartment complex located in Dallas. Texas for $24.1 million, generating net cash proceeds of $3.1 million and recognized gains of $3.6 million. In 2006, TCI sold two apartment projects for a total sales price of $9.2 million, generating net cash proceeds of $3.4 million and recognized gains of $3.3 million.
For the six month period ended June 30, 2007, TCI acquired over $112 million in income-producing properties, $14 million in land held for development and invested almost $92 million in residential and other development projects. These investments were financed principally with $107 million of acquisition-related debt, $84 million in construction and development financing, proceeds from land and income-producing property sales of $4 million, net proceeds from the refinancing of existing debt totaling $12 million and advances from affiliated companies.
About Transcontinental Realty Investors, Inc.
Transcontinental Realty Investors, Inc., a Dallas-based real estate investment company, invests in real estate through direct equity ownership and partnerships nationwide. For more information, visit the Company’s web site at www.transconrealty.com.

 

 

TRANSCONTINENTAL REALTY INVESTORS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)

(dollars in thousands, except share data)
                 
    June 30,     December 31,  
    2007     2006  
    (dollars in thousands)  
    (unaudited)          
Assets
                
Real estate held for investment
   $ 1,290,270     $ 1,089,995  
Less—accumulated depreciation
     (105,209 )     (97,541 )
 
            
 
                
 
     1,185,061       992,454  
Real estate held for sale
     42,153       54,935  
Real estate subject to sales contract
     65,174       66,027  
 
                
Notes and interest receivable
(including $4,360 in 2007 and $33,947 in 2006 from affiliates and related parties)
     26,188       39,566  
Investment in unconsolidated real estate entities
     34,232       30,573  
Marketable equity securities, at market value
     11,226       9,038  
Cash and cash equivalents
     5,091       4,803  
Other assets (including $248 in 2007 and $1,085 in 2006 from affiliates and related parties)
     67,687       52,771  
 
            
 
   $ 1,436,812     $ 1,250,167  
 
            
 
                
Liabilities and Stockholders’ Equity
                
Liabilities:
                
Notes and interest payable (including $6,762 in 2007 and $6,769 in 2006 to affiliates and related parties)
   $ 991,191     $ 799,069  
Liabilities related to assets held for sale
     32,224       43,579  
Liabilities related to assets subject to sales contract
     57,685       58,816  
Other liabilities (including $24,083 in 2007 and $1,695 in 2006 to affiliates and related parties)
     95,236       66,608  
 
            
 
     1,176,336       968,072  
 
                
Commitments and contingencies
                
 
                
Minority interest
     1,623       16,166  
 
                
Stockholders’ equity:
                
Common Stock: $.01 par value: authorized 10,000,000 shares; issued 8,113,669 shares at June 30, 2007 and December 31, 2006
     81       81  
Preferred Stock
                
Series C Cumulative Convertible: $.01 par value: authorized, issued and outstanding 30,000 shares:
(liquidation preference $3,000)
     —       —  
Series D: $.01 par value; authorized, issued and outstanding 100,000 shares at June 30, 2007 and December 31, 2006 (liquidation preference $100 per share)
     1       1  
Additional paid-in capital
     278,997       266,206  
Treasury stock, at cost (236,304 shares at June 30, 2007 and 212,800 shares at December 31, 2006)
     (3,479 )     (3,086 )
Retained earnings (deficit)
     (17,504 )     1,660  
Accumulated other comprehensive income
     757       1,067  
 
            
 
     258,853       265,929  
 
            
 
   $ 1,436,812     $ 1,250,167  
 
            

 

 

TRANSCONTINENTAL REALTY INVESTORS, INC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(dollars in thousands, except share data)
                                 
    For the Three Months     For the Six Months  
    Ended June 30,     Ended June 30,  
    2007     2006     2007     2006  
    (dollars in thousands)     (dollars in thousands)  
Property revenue:
                                
Rental and other property revenues ($702 in 2007 and $517 in 2006 from affiliates)
   $ 40,287     $ 29,384     $ 76,440     $ 58,241  
 
                                
Expenses:
                                
Property operating expenses ($3,472 in 2007 and $3,309 in 2006 to affiliates)
     22,849       17,811       44,279       35,318  
Depreciation and amortization
     6,767       4,875       12,194       9,819  
General and administrative ($1,588 in 2007 and $1,538 in 2006 to affiliates)
     2,027       1,667       5,205       3,038  
Advisory fee to affiliate
     2,696       2,161       5,096       4,187  
 
                        
Total operating expenses
     34,339       26,514       66,774       52,362  
 
                        
 
                                
Operating income
     5,948       2,870       9,666       5,879  
 
                                
Other income (expense):
                                
Interest income from notes receivable ($688 in 2007 and $424 in 2006 from affiliates)
     1,379       793       1,392       1,668  
Gain (loss) on foreign currency transactions
     (135 )     2       (4 )     4  
Other income (loss)
     (210 )     (123 )     819       238  
Mortgage and loan interest ($363 in 2007 and $232 in 2006 to affiliates)
     (19,557 )     (12,436 )     (35,432 )     (24,607 )
 
                        
Litigation settlement
     —       1,804       704       1,804  
 
                        
Total other income (expense)
     (18,523 )     (9,960 )     (32,521 )     (20,893 )
Loss before gain on land sales, minority interest and equity in earnings of investees
     (12,575 )     (7,090 )     (22,855 )     (15,014 )
Gain on land sales
     —       8,690       1,122       9,022  
 
                                
Minority interest
     —       361       4       189  
 
                                
Equity in earnings of investees
     450       —       700       —  
 
                        
Income (loss) from continuing operations
     (12,125 )     1,961       (21,029 )     (5,803 )
 
                                
Income tax benefit (expense)
     (267 )     941       653       687  
 
                        
 
                                
Net income (loss) from continuing operations
     (12,392 )     2,902       (20,376 )     (5,116 )
 
                                
Income (loss) from discontinued operations
     (763 )     2,689       1,865       1,961  
 
                                
Income tax benefit (expense)
     267       (941 )     (653 )     (687 )
 
                                
Net income (loss) from discontinued operations
     (496 )     1,748       1,212       1,274  
 
                                
Net income (loss)
     (12,888 )     4,650       (19,164 )     (3,842 )
 
                                
Preferred dividend requirement
     (228 )     (53 )     (455 )     (105 )
 
                        
 
                                
Net income (loss) applicable to common shares
   $ (13,166 )   $ 4,597     $ (19,619 )   $ (3,947 )
 
                        

 

 

TRANSCONTINENTAL REALTY INVESTORS. INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(dollars in thousands, except share data)
                                 
    For the Three Months     For the Six Months  
    Ended June 30,     Ended June 30,  
    2007     2006     2007     2006  
    (dollars in thousands)     (dollars in thousands)  
Basic earnings per share:
                                
Income (loss) from continuing operations
   $ (1.60 )   $ 0.36     $ (2.64 )   $ (0.66 )
Income (loss) from discontinued operations
     (0.06 )     0.22       0.15       0.16  
 
                        
Net income (loss) applicable to common shares
   $ (1.66 )   $ 0.58     $ (2.49 )   $ (0.50 )
 
                        
 
                                
Diluted earnings per share:
                                
Income (loss) from continuing operations
   $ (1.60 )   $ 0.35     $ (2.64 )   $ (0.66 )
Income (loss) from discontinued operations
     (0.06 )     0.21       0.15       0.16  
 
                        
Net income (loss) applicable to common shares
   $ (1.66 )   $ 0.56     $ (2.49 )   $ (0.50 )
 
                        
 
                                
Weighted average common shares used in computing earnings per share:
                                
Basic
     7,877,365       7,900,869       7,888,008       7.900,869  
Diluted
     7,877,365       8.190.519       7,888,008       7,900,869